I used to edit Innovation Management. My book, "The Elastic Enterprise", co-authored with Nick Vitalari and described as a must read for companies that want to succeed in the new era of business - looks at how stellar companies have gone beyond innovation to a new form of wealth creation. I speak on new innovation paradigms.
I started my writing career in broadcasting and then got involved in the EU's attempt to create an ARPA-type unit, where I managed downstream satellite application pilots, at just the time commercial satellite services entered the market. I also wrote policy, pre the Web, on broadband applications, 3G (before it was invented), and Wired Cities.
I have written for many major outlets like the Wall St Journal, Times, HBR, and GigaOm, as well as producing TV for the BBC, Channel 4 and RTE. I am a research fellow at the Center For Digital Transformation at UC Irvine, where I am also an advisory board member, advisory board member at Crowdsourcing.org and Fellow of the Society for New Communications Research.
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Does Facebook Belong On The World's Most Innovative Companies List?

NEW YORK, NY - MAY 18: The Times Square news ticker displays a headline about the newly debuted Facebook stock price at the end of the trading day on May 18, 2012 (Image credit: Getty Images via @daylife)

Facebook has been criticized for its IPO and its privacy policies in 2012 but it’s also been there and thereabouts on other people’s innovation lists – see this one over at Fast Company. Facebook has been a regular there for years.

But still – Facebook, the 5th most innovative company globally? And why such a jump? What gives?

The BCG list is compiled with the input of senior executives around the world and then weighted for three financial factors.

In 2008, in an effort to make the results more robust and truly reflective of the actual top innovators, we supplemented those choices with three financial measures: three-year total shareholder returns (TSRs), three-year revenue growth, and three-year margin growth. We have used that methodology ever since. Respondents’ votes count for 80 percent of the ranking, shareholder returns for 10 percent, and revenue and margin growth for 5 percent each.

That must surely mean that the executive input has been critical in driving Facebook’s reputation for innovation. It certainly would not be lifted by its financial performance.

To get an impression of Facebook’s association with innovation I did a few simple searches for online references to Facebook and innovation during 2012.

Silicon Valley has a Facebook hangover. Five days after the company’s giant IPO, the social network’s stock is slumping, and there are rumblings that it will sink further still. But it’s not just the share price that’s got the tech industry in the doldrums. Over the last few days—and in some ways even longer, ever since Facebook began its incredible rise—smart people here have been predicting that the social-networking boom would ruin the culture of Silicon Valley.

We’ve rarely seen a company borrow from its competition as quickly or as well as Facebook. And that focus on better serving end users has seen Facebook grow quickly over the years, even in the face of consistent privacy concerns.

So why do senior executive around the world believe Facebook is not just innovative but one of the world’s most innovative companies?

Facebook has scaled exceptionally well – but as Christensen points out that is execution not innovation. In fact, I think Christensen is harsh here.

Facebook has had to create very adaptive processes in order to scale its services to a billion people. It’s hacker developer culture seems to be different from most companies’. It entrusts the internal crowd with decisions in a way no other company would. And the sheer scale of its customer base is a strong indication of its process credentials.

That just about puts it in top innovator company. But at the same time it makes error after error with its innovations. So too does Apple, you might argue, looking over at Maps and Siri.

But executives are not voting up Facebook because they are tolerant of failure. My guess is they admire scale and monopoly. And therefore the lesson of the BCG list is that they need to rethink their approach to innovation. Facebook at 5 is an aberation.

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